Quitclaim deeds and transmutations of property under California Family Code section 852.
Another woman just came in, freaking out that she signed away property rights because a few years ago, her husband told her to sign a “quick-claim” deed on the house they purchased during the marriage.
First of all, it’s a “quitclaim” deed. And while we’re at it, family lawyers use “Dissomasters”, NOT “Discomasters”. (It always makes me smile).
So, back to her question – did I change community property to his separate property by signing a deed? As with all family law questions, it depends.
Let’s talk about transmutations. When you split up, a BIG issue is division of property. First, we gotta characterize the property – is it separate or community? California is a community property state, so generally speaking, all property acquired after the date of marriage is community, with exceptions of 1) Separate property reimbursements (read about them here); and 2) transmutations.
You can transmutate (change legal characterization) of property as follows:
- Change community into separate
- Change separate into community
- Change your separate into your spouse’s separate.
A long time ago, you can just orally transmutate property. This led to lots of “pillow-talk” changes in property. “I love you so much, I’ll give you my house!” Of course, when poeple split up, it was “he said, she said” hell for the Courts.
Thus, enter Family Code 852, which states this:
(a) A transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.
(b) A transmutation of real property is not effective as to third parties without notice thereof unless recorded.
(c) This section does not apply to a gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage.
(d) Nothing in this section affects the law governing characterization of property in which separate property and community property are commingled or otherwise combined.
(e) This section does not apply to or affect a transmutation of property made before January 1, 1985, and the law that would otherwise be applicable to that transmutation shall continue to apply.
So, is the quitclaim deed count as a “express declaration” sufficient enough to change the client’s interest from community to separate?
Let’s look at the facts. She said she signed the quitclaim during a refinance. She had defaulted on quite a few credit cards, thus ruining her credit, and her fiance was able to obtain a better interest rate without her on the deed/loan. HOWEVER, and this is the kicker – he had told her that the quitclaim deed was ONLY for the better interest rate…NOT because it would be his separate property. Being the loyal, trusting, non-family-lawyer wife that she was, she signed.
Thus, we would argue that she absolutely did not “make, join in, consent to, or accept” that she was giving up her interest by signing this quitclaim deed.
But that is not all. What if she understood the deed gave up her right? Under Marriage of Haines, if one spouse is disadvantaged to the other’s advantage, there arises a presumption the transmutation is invalid. The wife was absolutely disadvantaged by giving up the community interest in the house.
In a marriage, a spouse has a fiduciary duty to the other spouse, which means that they are not permitted to take advantage of the other.
Thus, the signing of a quitclaim/interspousal transfer deed during marriage by one spouse to the the other is not the end-all be-all of the character of the property. The facts surrounding each case MUST be examined and argued.
It is always prudent to consider a post-nuptial agreement which would satisfy the “express declaration” requirement of Family Code 852. Or maybe a simple statement (notarized) below (use at your own risk, as this is information, NOT legal advice):
Pursuant to California Family Code section 852, Husband and Wife enter into a “Transmutation Agreement”.
Wife desires and intends to change the characterization of her separate property, Blackacre, inherited through her grandfather, from Wife’s separate property to community property of her and her Husband’s community estate, to be equally owned hereinafter by he and wife.
By doing so, Wife desires and intends to waive any separate property reimbursements due her pursuant to California Family Code section 2640, which would otherwise be available for her.
Husband and Wife each acknowledge that each stand in a fiduciary relationship with each other, that he and she freely and voluntarily enters into this agreement, and he and she acknowledge that he and she are under no form of duress or any other form of “undue influence” (as described by California Family Code sections 850 – 852, and all case law stemming from these sections) from or caused by wife or any third-party in so transmuting and so waiving as provided by this Agreement.
Wife makes this transmutation, and makes this express waiver of 2640 reimbursement, with full knowledge of all relevant facts relating to the characterization and ownership of the asset(s) being transmuted by this agreement, as well as having a complete understanding of the legal significance and legal consequences of so doing. Wife acknowledges having ample and adequate opportunity to consult with and to receive legal advice from any attorney of his choosing.
Husband and Wife have read and understand the effects of California Evidence Code section 622 which provides:
“The facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest; but this rule does not apply to the recital of a consideration.”
Husband and wife so agree, and so memorialize this agreement in this writing.